After more than a decade of explosive growth and a record year in 2019 experiencing a double-digit tourism increase in almost all sectors, the travel industry faces one of the biggest challenges in its history. The global COVID-19 pandemic has devastated economies worldwide, hitting the entire tourism cluster particularly hard. Studies suggest the impact will be 9 times worse than 9/11.
As many as 100 million direct tourism jobs worldwide are at risk, in addition to sectors associated with tourism that provide employment for 144 million workers worldwide. Zooming in closer to home, the Leisure & Hospitality Industry makes up 19% of the US unemployment figure. In NY city the sector declined by almost 44%, which is mind-staggering.
According to the latest UNTWO report, export revenues from tourism were forecast to drop by $910 billion to $1.2 trillion in 2020. This will have a wider impact on the entire tourism value chain and is expected to reduce the global GDP by 1.5% to 2.8%. Small businesses which shoulder 80% of global tourism have been particularly vulnerable. The National Restaurant Association in the US, for instance, estimates that one in six restaurants across the country have already permanently shuttered due to the economic crisis amid the pandemic. If this estimate is accurate, 8,333 restaurants – including 4,500 establishments in NYC – have permanently shut down to date, closing their doors permanently.
And yet, any crisis is also an opportunity for Global Tourism and for all its sectors and segments. It´s the perfect time to rethink how tourism interacts with our societies, our economic sectors and our natural resources and ecosystems. It´s also a chance for all stakeholders in our industry to streamline operations, upgrade technology, train new talent and teams, and rethink their tourism strategy while focusing on the safety of their people.
Business Owners, Operators and Investors have been trying to weather the storm by quantifying the operational and financial impact for their businesses and by mitigating the cash and working capital. The impact has been huge, and not yet fully predictable, on both revenue and supply chains.
Thankfully, Luxury Travel is beginning to rise from the ashes and is experiencing growing demand because of pent-up desire to get away. Albert Herrera, Senior Vice President of Global Partnership at Virtuoso, shared in an online forum hosted by the International Luxury Hotel Association, that the usage and interest of the Virtuoso website had jumped up and requests had skyrocketed to 150,000 requests within 2 weeks after the news about the vaccine had been announced. People want to travel again and they are planning for that day, pent-up emotions are huge. The ultra-high-net worth individuals have the financial resources; for them it´s about being able to get away as quickly as possible. According to Herrera, this segment will be the first to return.
Jet Linx President & CEO Jamie Walker blows the same horn. Private aviation, which has always been a leading indicator in the luxury travel space, has already seen an incredible rebound. By comparison, the numbers were as far off as 80-90% in April 2020 but have bounced back to -10% only in December due to an increasing number of new clients. Consumers who traveled first class prior to the Pandemic are now flying on private jets. It seems that Private aviation, which used to represent the pinnacle of luxury travel prior to the Pandemic, has now become mainstream.
JoAnn Kurtz-Ahlers, Owner of Hidden Doorways, a representation and consulting firm for exceptional hotels, yachts, and destinations, has already seen an incredible rebound, both domestic and international. One of her properties, a Ranch in Wyoming, was up by 150% in bookings going into 2021, better than any other year prior to the pandemic. Some of the demand is driven by celebrations and a lot of wedding business. Family outings or any other form of social driven gatherings will lead the way to the recovery. According to JoAnn, her properties at Caribbean destinations have reported tons of bookings from Europe for summer 2021.
While leisure destinations, especially those in the drive-to market or those with easy air access will be recovering very quickly according to industry experts, Urban markets are trickier and a different discussion. Those are very much tied to two factors that don´t exist elsewhere – cultural destinations and luxury business travel, the later supplementing a lot of the urban properties. It is very unlikely that a rebound will be seen before 2022 in these segments.
What about Luxury Golf Travel?
Even though golf is considered a sport for everybody in the US, the participation rate is directly related to income levels. Reports show that the golf participation rate for income levels between $25,000 – $60,000 is about 8% -20%. This percentage increases to 30% for people with an income of over $150,000 and this ratio is even higher for ultra-affluent individuals. Every second millionaire plays golf. The fact that golf travel was the most resilient travel segment in the 2008 crisis reinforces these important numbers. Therefore there is no doubt that golf travel will prove to be extremely resilient again and rebound stronger than ever once borders are opening again.
But don´t expect to return to your “old normal” as both behavior and expectations of the luxury traveler have changed. If you are properly prepared to meet the new needs, you will not only survive but thrive in the Post-Pandemic Era.